Making Poverty History
On Wednesday, I'll be in Edinburgh, trying (peacefully!) to disrupt the G8 summit. So yesterday, I decided to do a bit of reading about development, in order that I might be able to articulate better what I feel is wrong with the global economy, and how these faults might be overcome. Essentially, I wanted to form a decent theoretical critique of the policies followed by the industrialised countries and the global financial institutions under their control (IMF, WTO, World Bank), and some reasonable proposals for the direction of development in the future.
It didn't come as a huge surprsie to me that it was rather more complicated than I initially thought, especially when it comes to suggesting better development strategies. A fascinating eye-opener has been Mark Weisbrot and Dean Baker's paper from June 2002, "The Relative Impact of Trade Liberalization on Developing Countries"
First, a warning: I found this paper pretty hard going, and I consider myself to have a reasonably solid understanding of economics, and a special interest in global trade and development issues. Neither am I eloquent enough to simplify it very much.
Probably the most surprising element of it is that it proposes that the protection of agriculture and manufactured goods by rich countries is basically insignificant, relative to other factors. They reckon 'liberalisation' by developing countries would have a more significant impact than 'liberalisation' by rich countries, but even this is pretty marginal compared to other factors. "the World Bank's projections imply that trade liberalization would only move developing countries a very small fraction of the way towards the sort of rapid growth experienced by South Korea or other successful developing countries."
In simpler terms, this suggests that the wailing by development charities like Oxfam (and, when politically convenient, Tony Blair) about the outrages of the CAP (or US steel tariffs, or whatever..) really misses the point.
Weisbrot and Baker also point out a number of rather unrealistic assumptions in the models used by the World Bank to make growth projections for developing countries, based on trade liberalisation. They note that assumptions about capital accumulation, urbanisation and labour mobility take no account of the massive social upheavals the projected development would produce.
Probably the most urgent element of Dean Baker's work on development is his insistence that imposing US-style patent laws on a global scale will lead to huge inefficiencies in the pharmaceutical market. This will have the effect of discouraging innovation, and of imposing collossal costs on consumers. In Africa of course, this isnt a matter of slapping another couple of quid on the price of a prescription - it's literally a matter of life and death if people can't afford vaccination/treatment for AIDS, tuberculosis and malaria. It's in these matters, which those with no time to trawl through the business pages every day may well not even be aware of, that developing countries' fates will be (and are being) decided.
"Make Poverty History" has at least brought development as an issue to public attention, in Britain and perhaps elsewhere. But celebration and self-congratulation are not appropriate responses to announcements about debt relief or aid increases. The real problems lie far deeper - so deep in fact, that they have yet even to be uncovered by the debates of the last few weeks. Those who care about development and global poverty have made fantastic progress in the last decade or so, and the foundation for a great deal more awareness and informed discussion about it now exists. But it's at this crucial moment that the whole debate needs desperately to become much more sophisticated, in order to improve peoples' understanding of the real issues. For as long as abolishing the CAP is the distant dream of development campaigners, real progress will prove impossible. So let's see Walden Bello, Joseph Stiglitz or Amartya Sen on Newsnight when Africa is up for discussion, instead of Bono.
It didn't come as a huge surprsie to me that it was rather more complicated than I initially thought, especially when it comes to suggesting better development strategies. A fascinating eye-opener has been Mark Weisbrot and Dean Baker's paper from June 2002, "The Relative Impact of Trade Liberalization on Developing Countries"
First, a warning: I found this paper pretty hard going, and I consider myself to have a reasonably solid understanding of economics, and a special interest in global trade and development issues. Neither am I eloquent enough to simplify it very much.
Probably the most surprising element of it is that it proposes that the protection of agriculture and manufactured goods by rich countries is basically insignificant, relative to other factors. They reckon 'liberalisation' by developing countries would have a more significant impact than 'liberalisation' by rich countries, but even this is pretty marginal compared to other factors. "the World Bank's projections imply that trade liberalization would only move developing countries a very small fraction of the way towards the sort of rapid growth experienced by South Korea or other successful developing countries."
In simpler terms, this suggests that the wailing by development charities like Oxfam (and, when politically convenient, Tony Blair) about the outrages of the CAP (or US steel tariffs, or whatever..) really misses the point.
Weisbrot and Baker also point out a number of rather unrealistic assumptions in the models used by the World Bank to make growth projections for developing countries, based on trade liberalisation. They note that assumptions about capital accumulation, urbanisation and labour mobility take no account of the massive social upheavals the projected development would produce.
Probably the most urgent element of Dean Baker's work on development is his insistence that imposing US-style patent laws on a global scale will lead to huge inefficiencies in the pharmaceutical market. This will have the effect of discouraging innovation, and of imposing collossal costs on consumers. In Africa of course, this isnt a matter of slapping another couple of quid on the price of a prescription - it's literally a matter of life and death if people can't afford vaccination/treatment for AIDS, tuberculosis and malaria. It's in these matters, which those with no time to trawl through the business pages every day may well not even be aware of, that developing countries' fates will be (and are being) decided.
"Make Poverty History" has at least brought development as an issue to public attention, in Britain and perhaps elsewhere. But celebration and self-congratulation are not appropriate responses to announcements about debt relief or aid increases. The real problems lie far deeper - so deep in fact, that they have yet even to be uncovered by the debates of the last few weeks. Those who care about development and global poverty have made fantastic progress in the last decade or so, and the foundation for a great deal more awareness and informed discussion about it now exists. But it's at this crucial moment that the whole debate needs desperately to become much more sophisticated, in order to improve peoples' understanding of the real issues. For as long as abolishing the CAP is the distant dream of development campaigners, real progress will prove impossible. So let's see Walden Bello, Joseph Stiglitz or Amartya Sen on Newsnight when Africa is up for discussion, instead of Bono.
posted by UK plc at 10:53 PM
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